TNTU news>B: Tengtu International Receives US $1.5 Million Financing From Leading Hong
Kong Investment Company
TORONTO, Jan 7, 2000 (BUSINESS WIRE) -- Tengtu International Corp.
(OTCBB:TNTU), the leading information technology provider to China
schools, announced today that it has completed a US$1.5 million
financing from Yugang International Limited (HK: 613), a large Hong
Kong investment and holding company. Proceeds will be used immediately
to step up the company's marketing activities throughout China,
especially in Hong Kong where Yugang has top connections in the
tight-knit business community which are expected to prove invaluable.
Yugang chairman and CEO C.K. Cheung, who has been called the Warren
Buffet of China, said that Tengtu International represented his
company's first investment in information technology (IT). "We much
admire the highly successful business model of CMGI (Nasdaq: CMGI) and
are delighted to choose Tengtu as our entry point into the huge IT
market in China. We look forward to a long-term relationship with
Tengtu as its strategic financial partner," he stated.
The financing is in the form of a convertible debenture due December
2003 with warrants attached. Interest will float at the prime rate of
the Hongkong and Shanghai Banking Corporation plus two percent.
Interest will not begin to accrue until December 15, 2000, and will
then be payable quarterly beginning March 15, 2001. Debentures may be
converted into restricted shares of Tengtu International common stock
at fifty cents, one dollar, two dollars and four dollars per share in
four annual stages over the life of the loan.
Tengtu International chairman and CEO Pak Cheung noted that even if all
debentures presently issued were converted at the initial conversion
price of fifty cents per share, the company would add only 3 million
shares to the approximately 21 million shares presently outstanding.
Cheung added that he anticipated conversion would occur at higher price
levels.
In addition, as part of the financing package, Tengtu issued to Yugang
a 3-year warrant to purchase 1.5 million restricted shares of common
stock at one dollar, two dollars and four dollars per share in three
annual stages. Cheung noted that full exercise of the warrant at the
minimum price would add $1.5 million cash to Tengtu coffers, while full
exercise at the maximum price would add $6 million. In either case, the
number of additional shares issued would be only 7% of present shares
outstanding.
"Tengtu shares were trading at 12 1/2 cents with no liquidity when we
initiated negotiations with Yugang," Cheung stated. "At that time, we
committed to an initial debenture conversion price set at four times
the then-current market price. But deals take time for legal work and
due diligence, and in the meantime Tengtu shares have advanced rapidly
with greater public recognition. Nevertheless, we were honor-bound in
the Asian business world to sign off on our original commitment," he
concluded.
"On behalf of all Tengtu shareholders, we welcome this investment by
one of the leading financial groups in the dynamic Hong Kong market as
a validation of our business plan," said Cheung.
About Yugang International Limited
Yugang International Limited is a Hong Kong company holding interests
in audio-visual products and components, industrial equipment,
automobile parts, agricultural products, raw materials and other
products in Central and Western China. With US$100 million in cash, it
is refocusing its investments primarily into information technology.
About Tengtu International Corp.
Tengtu International Corp., which began operations in 1996, is a
developer and distributor of multimedia educational and entertainment
software and related services, operating through a joint venture and
subsidiaries in the People's Republic of China, Hong Kong and Canada.
The company's joint venture and primary operating unit, 57% owned
Tengtu United Electronics Development, Co. Ltd. ("Tengtu United"), is
one of the largest developers of educational software in China. It is
also the primary operating unit of its minority (43%) stakeholder,
Beijing Tengtu Culture & Education Development Co. Ltd. ("Tengtu
China"), the Chinese state enterprise mandated to serve as the
country's gateway for all domestic and international educational and
entertainment software. Tengtu China was created with the cooperation
of Legend Computer Group, Great Wall Computer Group and Tai Ji Computer
Group, China's three largest computer companies.
Through such strategic relationships within the highest levels of the
Chinese government and computer industry, Tengtu United has won
assignment of the development of a comprehensive information technology
solution for China's national K-12 educational system, consisting of
more than 800,000 schools. The first phase of implementation is
currently underway.
Tengtu United also has been granted the exclusive license to
electronically publish educational materials, including converting to
electronic format the paper texts of the People's Education Press, the
sole source of materials authorized for use in Chinese schools. It is
also involved in the licensing and domestic production of all
domestically and internationally designed educational software for the
Chinese market. In addition, the company already distributes more than
100 titles of its own electronic books and animated movies and believes
that it is positioned to become China's leading educational software
publisher.
Tengtu International's other units include wholly owned animation and
television production studio TIC Beijing Electronics Co., Ltd.; 44%
owned educational software developer Iconix International, Inc. and 55%
owned software marketer Edsoft Platforms (Hong Kong) Ltd.
Note: The statements made in this press release for Tengtu
International Corp. may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Act of 1934, regarding events, conditions and financial
trends that may affect the company's operating results and financial
position. Prospective investors are cautioned that forward-looking
statements are not guarantees of future performance. Actual events or
results may differ from the company's expectations, which are subject
to various risks and uncertainties some of which are listed in the
company's SEC filings.
This press release was prepared by The Cavior Organization, Inc., a
public relations firm, based on information supplied by its client,
Tengtu International Corp. The information contained herein is believed
to be reliable, but has not been independently verified by The Cavior
Organization, Inc. None of the information contained in this press
release should be construed as an offer to buy or sell securities,
either directly or indirectly. The Cavior Organization, Inc. or its
officers or employees may from time to time acquire, hold or sell a
position in the securities of Tengtu International Corp. |
